NTL, the UK's biggest cable company, has struck a deal with its main creditors which sees them taking over the company in one of the biggest rescues in British corporate history.

The deal has yet to be signed off officially, having been reached with an unofficial committee representing groups holding more than half the group's $11bn (£7.4bn) worth of bonds.

Digital TV in the UK

BSkyB: 5.7m users (satellite)

ITV Digital: 1.26m users (terrestrial)

NTL: 1.25m users (cable)

Telewest: 724,000 users (cable)

The arrangement means the company will default on the bond payments which fell due on 15 April, and file for a US Chapter 11 bankruptcy, which protects a company from its creditors while it restructures.

The firm has been struggling under the weight of more than $17bn in debt, amassed as it rushed to take over rivals in the UK and elsewhere and build its network through the late 1980s and 1990s.

If it holds together, the deal could spell good news for the many other beleaguered and debt-ridden telecom companies littering European stock markets.

UK competitor Telewest, for instance, owes about £5bn. Its share price hit a high of 563p during 2000, but is now languishing at just below 10p, having started the year above 60p.

Split in two

In a statement, NTL said its operations - which include broadband internet access as well as TV and phone services - would continue uninterrupted under the shield of Chapter 11.

Its existing management, including chief executive Barclay Knapp whose position was thought to be in danger, will remain in place.

The company is to be split into a UK and Ireland operation, and a company, to be called Euroco, will take over the European activities.

The bondholders are to take 100% control of its UK side and 86.5% of Euroco.

Written off

The deal will effectively deal with about $10.6bn of its debt - allowing about $800m a year in savings on interest payments - as well as providing about $500m in new finance, the company said.

Its bank debts will be untouched.

Existing owners - which include a stake held by France Telecom - will have the right to buy shares as part of a $10.5bn rights issue, which would potentially give them up to 32.5% of NTL UK and Ireland.